I know there’s a game to write up, and I will get there, but this morning, the club’s accounts landed, and they’re certainly newsworthy.
For various reasons I didn’t have time to prep an article, but I have cast my eye over them this morning, and they make sobering reading for all League One clubs. Remember, Kieran Maguire is likely to praise us as a one of the better sides in League One in terms of finances, which may seem strange to those reading this, but that merely underlines the real state football is in right now.
£3 Million Loss, Turnover Increases
The club posted a loss of £2.98 million, marking its fourth consecutive year in the red. While turnover increased to £6.98 million, up from £6.53 million the previous year, higher operational costs, particularly a sharp rise in staff wages, contributed significantly to the growing deficit.
A key driver of the increased turnover was growth across multiple revenue streams. Matchday income rose to £2.35 million, representing a 5% increase despite a slight drop in average league attendance from 8,486 to 8,424. Season ticket sales declined, but higher single-match attendance from home fans, along with increased revenue from catering and bar services, helped compensate. Commercial and hospitality revenue saw the most notable growth, increasing by 16% to £1.75 million. Central distributions and grants, which include payments from the English Football League, contributed £1.77 million, a modest rise from the previous year’s figure. Additionally, football fortune and miscellaneous income, which includes player loan fees and staff compensation, climbed 20% to £426,000. Academy grants and fundraising saw a small dip, falling from £699,000 to £680,000.
Rising Costs Contribute To Deficit
Despite revenue growth, the club struggled to contain costs. Staff wages rose sharply from £5.93 million to £6.94 million, accounting for 99.4% of the club’s total turnover. This increase was partly due to a larger first-team playing budget and severance payments related to managerial changes following the dismissal of head coach Mark Kennedy. General salary increases across football and administrative departments further contributed to the rising wage bill. These financial pressures illustrate the club’s challenge in balancing competitiveness on the pitch with long-term financial sustainability.
Player Trading
Lincoln’s player trading activity was relatively limited as one of our big summer sales was not included in the numbers, meaning only one significant sale during the financial year. The transfer of Lasse Sorensen to Huddersfield Town provided a financial boost, though part of the fee was redirected to Stoke City due to a sell-on clause. In terms of acquisitions, the club made substantial investments in new players, including six-figure fees for Ethan Hamilton and George Wickens, as well as a five-figure one for Jack Moylan. Additional payments were also made as part of contingent deals for Ethan Erhahon, Sean Roughan, and Ben House.
Operational Deficit
The club’s operational deficit widened, with administrative expenses rising from £9.3 million to £10.1 million, representing an 8.6% increase. This contributed to an operating loss of £2.97 million, a deterioration from the previous year’s loss of £2.6 million. However, Lincoln’s net assets improved by £910,000 to £3.77 million, largely due to the injection of fresh investment through equity funding. Without these share issuances, the club’s financial position would have been considerably weaker.
Shareholder Sustenance
To sustain operations, the Imps’ continued to rely heavily on equity funding from shareholders. The Jabara family increased its stake, becoming the club’s largest investor with 32.2% of the issued shares. A further £3.9 million was raised through new share capital. Additionally, new investors Ron and Andrew Fowler acquired a 19% stake in Lincoln City Holdings, contributing significant post-year-end investment through their company, Liquid Investments Inc.
League One’s Issues
The financial report also raises concerns about the broader financial landscape of League One, where Lincoln is facing increasing competition from clubs with much larger budgets. The report notes that despite increasing its own playing budget, the club now finds itself in the fourth quartile for spending in the division. The financial gap between the top and bottom teams in League One continues to widen, making it increasingly difficult for clubs like Lincoln to compete at the highest level without sustained external investment.
A recurring theme is the club’s concern over the lack of a fairer revenue redistribution model across the English football pyramid. The ongoing legal disputes between Premier League clubs and the EFL over financial distribution have left clubs like us in a precarious position. The club expressed hope that the newly introduced Football Governance Bill will bring about regulatory changes that ensure greater financial sustainability across the football pyramid. However, it also acknowledged that the Championship clubs still hold significant power in determining the future financial framework, potentially widening the gap between the second and third tiers of English football.
Looking Ahead
Looking ahead, the Imps’ anticipate another significant deficit in the coming financial year, though it expects it to be slightly lower than the 2023/24 losses. This projection does not take into account potential financial boosts from player sales. The club remains dependent on continued investment from shareholders and external partners to bridge the financial gap. However, with spending across League One continuing to rise, we will need to carefully manage resources to remain competitive while striving for long-term financial stability.
The report ultimately presents a mixed picture. On the one hand, the club has made progress in increasing revenue streams and securing fresh investment. On the other, the rising cost of wages, increasing competition in League One, and a lack of significant player sales have placed further strain on the club’s finances. The challenge moving forward will be balancing financial sustainability with the ambition to remain competitive in an increasingly expensive footballing landscape.
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